India's Reliance Industries Ltd (RELI.NS) has bought a majority stake in online pharmacy Netmeds for 6.2 billion rupees ($83 million), facing up to Amazon.com in the competition for the country's fast-expanding online drug market.
The deal will give the oil-to-telecoms conglomerate a 60% stake in Netmeds, which sells both over-the-counter medication and more than 70,000 prescriptions drugs, Reliance said here late on Tuesday.
It also follows Amazon's move last week to start online drug sales in Bengaluru, and comes amid intensifying competition in India's e-commerce sector, which also includes Walmart's (WMT.N) Flipkart and a range of smaller players.
Reliance, India's most valuable company, has raised more than $20 billion in recent months by selling stakes in its digital arm, Jio Platforms.
Netmeds gives it a foothold in a sector that is forecast to grow to 250 billion rupees by 2022, according to consultancy Frost & Sullivan.
The growth of e-pharmacies, however, has left many Indian trader groups feeling threatened, who say online drugstores can unwittingly contribute to medicine sales without proper verification, and that the entry of large players can cause unemployment in the industry.
"It is not only about the pharmacies. It is also about the back end. There are tens of thousands of people employed in the pharmacy business," Yash Aggarwal, legal head of South Chemists and Distributors Association in New Delhi, said on Wednesday.
The group had written to Amazon last week, opposing the e-commerce giant's move.
Some analysts say it may be a while before Netmeds can become a significant business for Reliance.
"They'll have to really focus on building scale," said Deepak Shenoy, founder of wealth manager Capitalmind and an investor in Reliance.
"It's not a market that Reliance will be interested in unless it is a (100 or 200 billion-rupee) market."